KCC Tips: Get funds for farming through KCC—who can apply?

Farmers frequently require funds for agricultural operations spanning from sowing to harvesting. Expenses related to seeds, fertilizers, pesticides, irrigation, labor, and farm equipment often pose a significant challenge for them. To address these needs, the government launched the Kisan Credit Card (KCC) scheme.

Through the KCC, farmers can obtain bank loans for farming and allied activities. The scheme was introduced in August 1998. Initially, it was primarily used to cover expenses related to crop cultivation. Later, its scope was expanded to include activities such as dairy farming, animal husbandry, fisheries, poultry, and beekeeping.

How affordable are KCC loans?

A key feature of the KCC is its low interest rate. Under the modified interest subvention scheme, banks are supported in providing eligible KCC loans of up to ₹3 lakh to farmers at an annual interest rate of 7%. If a farmer repays the loan on time, they may receive an additional interest subvention (rebate) of 3% from the government. Consequently, the effective interest rate for a farmer who makes timely repayments can be as low as 4% per annum. This interest benefit is subject to specific rules and eligibility criteria; therefore, farmers should consult their banks for details regarding current terms and interest subvention.

Who can avail the benefits of the KCC?

Various categories of farmers can benefit from the KCC scheme. This includes farmers cultivating their own land. Additionally, tenant farmers and sharecroppers may also be eligible. Self-Help Groups (SHGs) and Joint Liability Groups (JLGs) of farmers can also come under the ambit of this scheme. Furthermore, individuals engaged in activities such as animal husbandry, dairy farming, fisheries, beekeeping, sericulture, and mushroom cultivation can apply for a KCC. Linking the bank account with Aadhaar may be mandatory to avail the benefits of the modified interest subvention scheme.

What is the maximum loan amount available under KCC?

The loan limit under KCC varies from farmer to farmer; it is determined based on factors such as landholding, crops grown, the area under cultivation, and specific requirements. A credit limit of up to ₹3 lakh is available to cover expenses related to crop cultivation and post-harvest activities. Meanwhile, the working capital limit for allied activities—such as animal husbandry, dairy farming, fisheries, sericulture, and beekeeping—can go up to ₹2 lakh. A 'Flexi KCC' facility is also available for small and marginal farmers; for certain farmers with landholdings of up to 1 hectare, the Flexi KCC limit can range from ₹10,000 to ₹50,000.

How is the KCC limit determined?

The KCC credit limit is generally fixed for a period of five years. It operates as a revolving credit facility, meaning farmers can withdraw and repay funds within the sanctioned limit based on their needs. When setting the limit for the first year, factors such as estimated cultivation costs, the area under cultivation, post-harvest expenses, household needs, farm asset maintenance, and insurance premiums are taken into account. Subsequently, there is a provision to increase the credit limit by up to 10% annually from the second to the fifth year to account for rising costs. Term loans for requirements such as land improvement, irrigation systems, or the purchase of agricultural equipment can also be integrated into the KCC facility.

For what purposes can KCC funds be used?

KCC usage is not limited to wheat, paddy, or other seasonal crops; farmers can utilize it for cultivating vegetables, fruits, flowers, spices, medicinal plants, and other crops. The funds can also be used to cover post-harvest expenses. Additionally, credit facilities can be availed based on Electronic Negotiable Warehouse Receipts (e-NWR). Another advantage is that farmers can avoid the compulsion to sell their produce at low prices immediately after harvest. Under certain circumstances, an interest subsidy benefit for up to six months is available on the receipt issued against produce stored in a registered warehouse. Interest subsidy benefits may also be availed—in accordance with the rules—if a crop loan is restructured due to crop damage caused by natural calamities.

Where can one get a KCC made?

Farmers can apply for a KCC at various banks and financial institutions. These include public sector banks, eligible private sector banks, regional rural banks, rural cooperative banks, small finance banks, and computerized Primary Agricultural Credit Societies (PACS).

How to apply for a KCC?
Farmers can apply for a KCC by visiting their nearest bank branch. Many banks also offer online application facilities. During the application process, documents such as an identity proof, Aadhaar card, proof of residence, land records or lease documents, and other necessary papers may be required. The bank verifies the farmer's eligibility and the submitted documents. Once the verification is complete, the KCC can be issued to the eligible farmer. Before applying, farmers should obtain up-to-date information from their bank regarding interest rates, subsidies, loan limits, required documents, and repayment terms.

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